The Philippines remains a top destination for IT outsourcing and BPO firms

Mar 20, 2015Outsourcing

The value chain for back-office service has dramatically evolved over the past two decades, with advances in technology and communications infrastructure allowing companies access to a pool of global talent and huge cost savings. In like manner, many developing countries have been given a leg up in the global economy, all thanks to offshore outsourcing. With distance ceasing to be all-important, the Philippines continues its strong rally to secure a spot at the forefront of the global IT-BPO race.

2014 has seen an 18.7% revenue growth to about $18.4 billion in the Philippine IT-BPO industry. This sustained growth, according to IT and Business Process Association of the Philippines (IBPAP) chair, Danilo Sebastian L. Reyes, is driven largely by the growing demand for its services from the global offshoring industry, primarily in the voice and non-voice sectors, healthcare information management, global in-house centers (GICs), as well as gaming and animation.

The A.T. Kearney Global Services Locations Index of 2014 reflects this insight, placing the Philippines at number seven in the top 50 countries that provide the best outsourcing activities. The Philippines has an index score of 5.75, a climb up from its 5.65 in 2011 when it ranked 9th. The Philippines now holds a prominent position in the market and the index as one of the largest destinations outside India, with strengths expanding from call centres into higher value-added voice services as well as into IT and BPO offerings.

Optimistic, Reyes further declared that the Philippine IT-BPO sector is on the right path to achieving its major goals – to hit $25 billion in revenue and reach 1.3 million in employment level by 2016. He added that the industry would continue to grow given the diversification of the services offered, with the contact centre sector still the biggest revenue contributor, and healthcare information management stepping up its game as more offshoring opportunities open up with the revamp of the US medical coding system.

Apart from the double-digit growth in 2014, the industry also hit 1.03 million in total employment, the bulk of which coming from contact centres, employing 630,000. This goes to show that the country’s educated human resources, cost competitiveness, excellent infrastructure, government support for the industry, and proven track record, have all helped in shaping the Philippines as a top destination for IT outsourcing and BPO firms.

Currently, almost all major global IT-BPO vendors have a presence in the Philippines, with most of the IT-BPO industry’s business coming from US and Japan. Australia, a mature market for IT suppliers, also has many customers choosing developing countries like the Philippines as the alternative to India.

The industry is expecting a $21.3 billion revenue leap and 1.18 million in employment generation level in 2015.